Bitcoin miner Core Scientific declines $1b buyout offer

Core Scientific Inc., a significant player in the Bitcoin (BTC) mining industry, has rejected an unsolicited $1 billion takeover offer from artificial intelligence (AI) startup CoreWeave Inc. as more and more companies scamper to latch onto the crypto bandwagon.

Core Scientific rejects takeover bid 

Core Scientific, one of North America’s largest owners and operators of high-powered digital infrastructure for Bitcoin mining and hosting services, received an unsolicited non-binding proposal from CoreWeave to acquire all of its outstanding shares on a fully diluted basis for $5.75 per share in cash.

The proposal, valuing Core Scientific at $5.75 per share, was made on March 28, 2023, and was rejected by the company’s board of directors.

This proposal came shortly after Core Scientific and CoreWeave signed a series of 12-year contracts for Core Scientific to provide approximately 200 MW of infrastructure to host CoreWeave’s high-performance computing services.

Despite the potential benefits of the partnership, Core Scientific’s board determined that the offer significantly undervalued the company and was not in the best interests of the company and its shareholders. The board cited Core Scientific’s significant growth potential and its ability to capitalize on the growing demand for data center space and high-performance computing facilities.

This decision follows Core Scientific’s emergence from bankruptcy protection in January. Following the announcement, the company’s shares jumped as much as 16% to $8.30 in June 6,  and have surged around 70% since the initial takeover offer.

Core Scientific’s $3.5b deal with CoreWeave

In other news, Core Scientific has recently inked a significant 12-year agreement with CoreWeave, a cloud computing provider, to supply 200 megawatts (MW) of infrastructure for hosting CoreWeave’s high-performance computing (HPC) operations.

This partnership represents a milestone in Core Scientific’s strategy to diversify its business model and capitalize on the increasing demand for data center space and high-performance computing facilities.

The deal, valued at $3.5 billion, is anticipated to generate cumulative revenue surpassing $3.5 billion over the initial 12-year contract periods.

The estimated average annual revenue from these contracts is approximately $290 million. This revenue stream will enable Core Scientific to balance its portfolio between Bitcoin mining and alternative computer hosting, positioning the company to optimize cash flow and mitigate risks while retaining substantial exposure to Bitcoin’s potential growth.

Approximately 18% of Core Scientific’s total operating infrastructure will be utilized to accommodate CoreWeave’s HPC operations.

More firms making inroads into crypto 

Bakkt, the digital asset platform launched by Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), is reportedly exploring a potential sale.

The company has enlisted a financial advisor to assess various strategic options, including a possible sale or breakup.

This news coincides with fintech brokerage firm Robinhood’s recent announcement of its acquisition of the European crypto exchange Bitstamp for $200 million. This move reflects a broader trend of larger firms acquiring crypto-related companies as the industry consolidates.

Having gone public in 2021 through a merger with a blank-check vehicle, Bakkt has been evaluating its strategic alternatives with the guidance of a financial advisor. 

Despite posting a first-quarter loss of $21 million on $855 million in revenue, Bakkt’s shares surged 15% to $22.33 on June 7. Its market value hovers at around $300 million.

The potential sale or breakup of Bakkt emphasizes the ongoing consolidation within the crypto industry as larger firms aim to bolster their presence in the digital asset space. With Bakkt holding a BitLicense from the New York State Department of Financial Services and forging partnerships with companies such as Starbucks and Microsoft, the platform could emerge as an attractive acquisition target for firms seeking to enter or expand in the crypto market.

As Web3 market participants continue to anticipate the coming of a massive crypto summer, it definitely won’t be a surprise to see more established firms making inroads into the fledgling cryptoverse.